RPSM02403020 - Employer Pages: Registering a pension scheme with HMRC: Contracting out of the state second pension scheme on or after 6 April 2006: I have set up my own registered occupational pension scheme - can it be contracted out?

I have set up my own registered occupational pension scheme - can it be contracted out?

You, as employer, can elect for your scheme to be contracted out of the state second pension. You decide which categories of employee (if not all your employees) will be covered by your scheme in this way. Your scheme will then provide these employees with a pension to replace the additional state pension, in addition to providing them with an occupational pension.

The scheme members who are in the categories of employees which you decided should be contracted out are automatically contracted out, and can only stop being contracted out by leaving the scheme altogether.